Playstation 3’s Death Spiral

This site may earn affiliate commissions from the links on this page. Terms of use.

Is the Playstation 3 doomed? Given the continuing spiral of reduced sales of the console, and of games that ship for the PS3, the situation has never been more dire for Sony’s premiere gaming console.

Every month, market research firm NPD releases the sales figures for the US for the top selling consoles and video games. Let’s look at the numbers for console games for March, 2009:

Nintendo Wii

601K

Nintendo DS

563K

Xbox 360

330K

Playstation 3

218K

Playstation Portable (PSP)

168K

Playstation 2

112K

To put this into some context, let’s take a look at numbers from March, 2008:

Nintendo Wii

721K

Nintendo DS

698K

PSP

297K

Xbox 360

262K

Playstation 3

257K

Playstation 2

216K

Several things have occurred since March, 2008. First, the worldwide financial meltdown accelerated, which no doubt has an impact on buying habits of items like game consoles, which are certainly not necessities. Secondly, standalone Blu-ray players have substantially improved in performance and dropped in price.

So while you can argue that the PS3 is still one of the better Blu-ray players, a number of lower cost models that integrate better into A/V systems are now available.

And third, Microsoft dropped the price on the Xbox 360.

That third point is probably one key reason Xbox 360 sales are up in March 2009, compared to March 2008. In fact, the 360 is the only console whose sales are up relative to a year ago. (On the other hand, even though the Nintendo Wii is down from a year ago, it’s still nearly double the Xbox 360 figures.)

The problems facing Sony (at least in the US) are further illustrated by the sales numbers for the top ten video games.

Resident Evil 5 (Xbox 360)

938K

Pokemon Platinum (Nintendo DS)

805K

Halo Wars (Xbox 360)

639K

Resident Evil 5 (PS3)

585K

Wii Fit w/Balance Board (Nintendo Wii)

541K

MLB ’09: The Show (PS3)

305K

Killzone 2 (PS3)

296K

Wii Play w/Remote (Nintendo Wii)

281K

Mario Kart w/Wheel (Nintendo Wii)

278K

Major League Baseball 2K9 (Xbox 360)

205K

Of the top ten, Xbox 360 software crushed the competition in terms of units, with a total of 1.78M games sold. Of course, Nintendo’s Wii software sales probably made them more money. In that top ten, the Wii represents 1.1M units, but the Wii Fit, at 541K, is a game and controller combo that goes for around $90. The PS3 did eke out second place in software sales, falling just shy of 1.2M units.

There are two key points to consider in those numbers. First, Resident Evil 5 on the Xbox 360 outdid RE5 on the PS3 by 60%. The second point is that Killzone 2, a PS3-exclusive and a major release for the PS3 didn’t hit 300,000 units sold. That has to be a blow to Sony.

Right now, the PS3 is simply too expensive, particularly in today’s harsh economic conditions. $400 and up, is not competitive. And if PS3-exclusive titles keep selling poorly, developers who aren’t owned by Sony are going to be very skittish about doing exclusives for Sony’s current gen console.

That’s the story for the US. Of course, Sony’s home is Japan, and Bill Harris has a cogent analysis of just how poorly Sony is doing in its mother country. Bill plots a 12 month rolling average of console sales over the past decade, and it’s quite illuminating.

Sony’s PS3 is in dire trouble. It’s notoriously difficult to program, which doesn’t endear it to developers. Games don’t sell as well on the PS3 as other consoles, which makes publishers skittish. Sony’s flagship console needs a big price cut, but it’s unclear if the PS3 can be cost-reduced enough to support it, given the continuing high cost of its components. The company may have no choice, if it wants to remain in the game.